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Monday, June 12, 2017

Today’s Blog may sound more like political propaganda,
but many political issues have significant economic consequences.

FOOD STAMPS AND UNEMPLOYMENT

It’s odd that we have very low unemployment now, but very
high numbers of people on subsistence. Here’s a clip from “Matt Trivisonno’s
Blog”…

“…we have been offshoring jobs [and] we have been
following a policy of mass immigration, bringing in about 1 million legalimmigrants per year. It is painfully
obvious that our economy has not been able to generate enough jobs for this
massive increase in population, and widespread poverty is the result…In August
of 2016, WikiLeaks released hacked emails from billionaire George Soros where
he gave marching orders to President Obama to admit more migrants to the USA
(among other things).” Charts and Commentary
at…

My cmt: …but unemployment is low so why food stamps? My
guess would be the jobs held by immigrants and others who have lost
manufacturing jobs are low paying. A
family of 4 with income below $31,596 qualifies for Food Stamps. A single
person must make below $15,444 to qualify. Each person on Food Stamps receives
about $125 per month. The program cost $71-billion last year or about $650 per
taxpayer.

OBAMACARE IS BEING FUNDED UNCONSTITUTIONALLY (LA Times,
12 May 2016)

“…a federal judge declared the Obama administration was
unconstitutionally spending money to subsidize health insurers without
obtaining an appropriation from Congress.” Story at…

“…the Patient Protection and Affordable Care Act also
granted subsidies to go to the insurers to cover the cost. Well, to be precise,
lawmakers who dreamed up Obamacare promisedthe payments to insurers, but did not
appropriate any money to actuallypaythem.” Story at…

My cmt: I am not making a point that Obamacare is good or
bad – I am troubled that once again, our politicians hold themselves above the
law.

When I was in Government, I ran a 20-million dollar
program (small by Gov’t standards) having to do with operation and maintenance and
including some construction projects.I
learned that there is a spending principle in Government that is absolutely
sacrosanct - before the Government can spend a dime, 2-bills must be passed:
(1) An Authorization bill that authorizes the effort (2) an Appropriation Bill
to provide the funds.Absent these two
bills, any expenditure would be illegal and un-Constitutional. In my
experience, occasionally an illegal expenditure might occur by mistake if a
contractor was directed to perform work before funds were obligated or if a
contractor was directed to do work outside the scope of a contract. In such
cases, Contracting Officers sometimes lost their warrants and/or were forced to
retire; or in one case that I’m aware of, a senior Colonel in the Army received
an Article 15 (an administrative punishment that would effectively end one’s
Army career). Illegal expenditures in any form are a big deal, but in these
cases, they didn’t violate the constitution since the work was authorized and
there was an appropriation. In most cases with which I am familiar, the
violations were unintentional. (These cases involved the Anti-Deficiency Act,
but that is another story.)

I cannot conceive of expenditures in the millions of
dollars without an Appropriation.The
millions (billions?) paid to Obamacare insurers without an Appropriation is a
clear violation of the Constitution to which every Government employee swears
an oath the day he or she is hired. Firings, disbarment or prison might be
appropriate for the Government employees/officials who illegally approved these
payments.

Impeachment would be the appropriate course of action for
a President. Instead Republicans chose to pursue a court case.One is left to wonder why the Congress
allowed the President and Executive Branch to do it without taking more
decisive action. This is exactly the kind of Presidential usurpation of power
that Thomas Jefferson feared.

MARKET REPORT / ANALYSIS

-Monday the S&P 500 slipped about 0.1% to 2429.

-VIX rose about 7% to 11.46.

-The yield on the 10-year Treasury rose to 2.215%.

Today’s commentary is not much different than yesterday…

Thursday, Friday and Monday we saw advancing-stocks
outpace declining-stocks; advancing volume exceeded declining-volume.This indicates the small caps are gaining
traction and is usually a bullish indication. The S&P 500 usually follows
the smalls so perhaps the Index can track up from here.

We’re clearing some of the negative signs so perhaps I’ll
be able to get more bullish soon. Still, until we see a few more positive
signs, I think we are stuck with the same summary again: Overall, I think the
short-term performance is somewhat limited; markets can go higher, but perhaps
not too much higher before we move back at least a couple percent.

Longer term, I remain cautiously bullish; I will worry
more in late-summer and into early fall.

TODAY’S RANKING OF 15 ETFs (Ranked Daily)

The top ranked ETF receives 100%. The rest are then
ranked based on their momentum relative to the leading ETF.While momentum isn’t stock performance per
se, momentum is closely related to stock performance. For example, over the 4-months
from Oct thru mid-February 2016, the number 1 ranked Financials (XLF) outperformed
the S&P 500 by nearly 20%.

*For additional background on the ETF ranking system see
NTSM Page at…

Technology (XLK) remains No 1, but it is apparent that
the leadership is flagging. Aerospace and Utilities are rapidly gaining ground.
Energy has been doing well in the past several sessions. Technology was AGAIN the
worst performer; AGAIN Energy was the best. If Tech underperforms tomorrow, it
will be time to sell XLK.

I would avoid XLE; its 120-day moving average is falling;
but it has been the leader for the last 2-days.On a shorter term basis the S&P 500 is now outperforming Utilities –
I see that as a good sign.

SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)

Neutral with no positions recommended. - 5/24/2017
thru present.

-“In a
bull market, you can only be long or neutral.” – D. Gartman

-“The best policy is to avoid shorting unless a major
bear market is underway and downside momentum has been thoroughly established. Even
then, your timing must sometimes be perfect. In a bull market the trend is
truly your friend, and trading against the grain is usually a fool's
errand.” – Clif Droke.

-“Commandment #1:“Thou
Shall Not Trade Against the Trend.” - James P. Arthur Huprich

MONDAY MARKET INTERNALS (NYSE DATA)

Market Internals
remained neutral on the market.

Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late.They are most useful when they diverge from
the Index.In 2014, using these internals
alone would have made a 9% return vs. 13% for the S&P 500 (in on Positive,
out on Negative – no shorting).

LONG TERM INDICATOR

Monday, Price, Volume, Sentiment & VIX indicators
were neutral. (With VIX recently below
10, VIX may be prone to incorrect signals. Usually, a rising VIX is a bad
market sign; now it may just signal normalization of VIX, i.e., VIX and the
Index may both rise. As an indicator, VIX is out of the picture for a while.)

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION

I increased
stock allocation to 50% stocks in the S&P 500 Index fund (C-Fund) Friday,
24 March 2017 in my long-term accounts, based on short-term indicators.
Remainder is 50% G-Fund (Government securities). This is a conservative retiree
allocation, but I consider it fully invested for my situation.

The previous signal was a
BUY on 2 June and the last actionable signal was a BUY (from a prior sell) on
15 November 2016.

Followers

About Me

I am an engineer with a lifelong interest in "playing with numbers" so what could be more fun than trying to develop a system that beats the stock market? Well, lots of things, but I decided to do this anyway.
While I am not a finance-professional, or professional investor, I have developed some skills.
I competed in two CNBC Million Dollar Portfolio contests finishing in the top 4% in 2008 (34,320th of 800,000) and the top 0.1% (448th of 500,000) in 2009. More importantly, I managed to sell out of my retirement accounts at or near the top in 2000 and 2007 and bought close enough to the bottom that I didn’t lose too much sleep. (Even Bill Gates lost SOME sleep.)
I hope that my thoughts will help you achieve your investing goals. Please remember that my ideas are free and there may be times when my ideas are worth less than what you paid.